This year, Apple switched away from Samsung and had a company
called Taiwan Semiconductor Manufacturing Co. (TSMC) make most of
the iPhone and iPad chips,
The Wall Street Journal reported. Samsung still made a small
percentage of Apple's chips, but it was a big loss of business.

It's also part of the reason why Samsung's
profits have been dropping like a rock this year. For the
third quarter of 2014, Samsung's profits were down about 50%.
Samsung blamed sluggish smartphone sales and a decline in its
chip business for most of that decline.

But the new deal means Samsung will make 80% of Apple's iPhone
and iPad chips again, the Korea Times reports. The deal is worth
"billions," according to the report.

Apple designs its own chips for the iPhone and iPad but needs a
manufacturing partner to actually build them. Historically, that
manufacturer has been Samsung. But Apple switched to TSMC this
year. Now it looks as if TSMC isn't cutting the mustard, so it's
back to Samsung again.

Still, even though Samsung will be making most of Apple's chips
again, it still faces a big challenge in its smartphone business.
Android manufacturers like Xiaomi and Lenovo are able to make
devices with high-end specs but cost about half as much as a
Samsung phone.

According to BI Intelligence, Samsung's smartphone shipments
continue to fall, while other rivals are on the rise. Xiaomi, for
example, is now the third-largest smartphone vendor in the world.